1. What is Pay Protection?
“Pay protection” refers to the principle that when an employee moves (or is appointed) from one organisation (for example a central government department, a PSU, or autonomous body) to another, the pay (basic pay + allowances etc) drawn in the former organisation is protected (to a certain extent) so the employee does not suffer a reduction in pay simply because of the move.
In other words: the employee should not end up worse off purely because of the change of employer, when the job and responsibilities are comparable.
2. Key Guidelines & References
Here are some of the major circulars/OMs and guidelines that govern pay protection in the Indian context:
- The major guideline for pay fixation of board-level executives of CPSEs is the Department of Public Enterprises (DPE) Office Memorandum (OM) F.No. 2(34)/12‐DPE(WC)‐GL‐XX/12 dated 14th December 2012. CGE News – 8th Pay Commission+3GovTempDiary+390paisablog.in+3
- This OM deals with “Finalization of terms & conditions including pay fixation in respect of Board level executives of CPSEs, revised procedure thereof”. GovTempDiary
- Among other aspects, it touches upon pay protection (last drawn pay) etc. Indian Kanoon+1
- The actual PDF of guidelines can be accessed (for example as referenced by you: https://documents.doptcirculars.nic.in/D2/D02eod/PDF/14.12.2012-DPE%20guidelines%20for%20fixation%20of%20pay%20of%20CPSE%20executives.pdf )
- The DPE site also records various pay‐revision/HPPC (High Pay/Part‐Revision) recommendations. DPE
- For “protection of pay on appointment to central government posts” from PSUs/autonomous bodies etc., the Department of Personnel & Training (DoPT) OM No. 5/2/2012-Estt.(Pay‐I)(Vol.II) dated 13th August 2020 covers that topic. CGE News – 8th Pay Commission+1
- There is also a document from DoPT/Estt.(Pay‐I) titled “Pay Protection on appointment to Central Government posts on DR basis” (updated 14.09.2022) which summarises many of these rules. Department of Personnel and Training
3. What the 2012 DPE Guidelines Say (Key Highlights)
From the 2012 OM:
- The last pay drawn by the incumbent should have been drawn as per DPE guidelines.
- The fixation procedure for board-level executives has been simplified: the respective administrative ministry plus integrated finance wing (IFW) will finalise pay and terms, rather than multiple vettings.
- It is clarified that for below board level executives and non‐unionised supervisors, the same principles apply mutatis mutandis
- Scale of pay and grades: for below board level executives, CPSEs must only adopt grades E0 to E9 and cannot adopt arbitrary pay scales.
4. When Does Pay Protection Apply – General Cases
- When an employee from central government/PSU/autonomous body etc. is absorbed into a CPSE or taken on deputation (depending on rules) and the post is comparable, then pay drawn may be protected (basic + DA/IDA) subject to scale/maximum of new post. (Check DoPT guidelines)
- When moving from one PSU to another, the principle may apply if the offer/appointment letter or corporate policy allows for protection of previous pay; but this is often contested. (See examples below)
- Payscale must permit the higher of previous pay or minimum of new scale; if previous pay is higher than new scale, then sometimes pay protection requires special approval.
5. Specific to PSUs / CPSEs – What Practically Happens
- Many PSUs follow DPE scales, and when a person joins from another PSU, they may or may not get as high pay as earlier — if the new post’s scale is lower.
- For example, in the case of IOCL, the RTI / HR manual shows:
- IOCL’s RTI manual notes that “The remuneration of the Officers … is governed by the guidelines of the Department of Public Enterprises … The pay scales of officers are of Industrial DA pattern.” IOCL
- In a recruitment advertisement of IOCL (Advt. No. 613feac7…), it states: “there is no provision of protection of the pay in any manner for candidates … who may have been employed to any post prior to applying for the positions notified above.”IOCL
- This clearly indicates that for certain recruitments, IOCL has specifically disallowed pay protection.
- A Q&A forum post (LawyersClubIndia) mentions: “I had joined IOCL after applying properly in 2009 … I requested pay protection but IOCL/hr Dept refused ..” lawyersclubindia
- This suggests in practice the guarantee of pay protection when moving into IOCL (or similar PSUs) from another PSU may not be honoured unless explicitly stated.
6. What to Check / Do Before Joining
If you are moving from a central government/PSU/autonomous body to a PSU (or from one PSU to another) and want pay protection, you should check/ask:
- Offer/Appointment Letter: Does it mention pay protection (or “pay to be protected” clause) as per your last drawn pay? If not, risk is on you.
- Proper Channel/NOC: Did you get NOC from your previous employer and join via proper channel? Some guidelines link eligibility to that.
- Minimum service/confirmation: Often you must have completed probation / confirmation in your previous service to claim pay protection.
- Scale of the new post: Check if your previous pay + allowances falls within the scale of the post you are offered. If your previous pay is higher than the max of the new scale, the protection may be refused or require special approval.
- Employer’s policy: Specifically check the PSU’s HR policy: some PSUs may have explicitly excluded pay protection for lateral or fresh recruitment (as above with IOCL).
- Terms of recruitment: For officers/executives, board‐level etc., the DPE guideline’s relevant OM may apply. For lower levels, you might check union/negotiated service rules.
- Documentation: Ensure you collect salary certificate/last drawn pay details, service certificate, etc.
- Legal recourse: If pay protection is claimed but denied, you may have to prepare for departmental/HR grievance or legal challenge, citing the relevant OMs.
7. Why Many Employees Face Issues
- Ambiguity: Many employees didn’t insist on pay protection clause in the offer and later find scale of new post is lower.
- Employer’s refusal: Some employers (PSUs) explicitly disallow pay protection in their offer advertisements.
- Scale mismatch: If the previous employer paid a higher scale than the new post offers, employer may argue “you were appointed to a lower grade”.
- Oversight: Some recruits are told verbally “you’ll be placed in higher scale later” but it’s not documented.
- Variation across PSUs: The DPE guidelines provide the framework, but PSUs’ internal HR policy/appointment offers matter a lot.
